Globalization, its Demise, and its Consequences

There is very, very much to like about the recent (3-24-2025) article in Jacobin by Branko Milanović entitled What Comes After Globalization?

First, Milanović explores historical comparisons between the late-nineteenth-century expansion of global markets and trade (what he calls Globalization I and dates from 1870 to 1914) and the globalization of our time (what he calls Globalization II and dates from 1989 to 2020). The search for and exposure of historical patterns are the first steps in scientific inquiry, what Marxists mean by historical materialist analysis. 

Unfortunately, many writers-- including on the left-- take the more recent participation of new and newly engaged producers and global traders, a revolution in logistics, the success of free-trade politics, and the subsequent explosion of international exchange as signaling the arrival of a new, unique capitalist era, even a new stage in its evolution. 

Recognizing a growing share of trade in global output, but burdened with a limited historical horizon (the end of the Second World War), left theorists drew unwarranted, speculative conclusions about a new stage of capitalism featuring a decline in the power of the nation state, the irreversible domination of “transnational capital,” and even the coming of a borderless “empire” contested by an amorphous “multitude.”

Countering these views, writers like Linda Weiss (The Myth of the Powerless State, 1998) and Charles Emmerson (1913: In Search of the World Before the Great War, 2013) bring some sobriety to the question and remind us that we have seen the explosive growth of world trade before, generated by many of the same or similar historic forces. Weiss tells us that “the ratios of export trade to GDP were consistently higher in 1913 than they were in 1973.” Noting the same historical facts, Emmerson wryly concludes “Plus ça change”.

Milanović’s recognition of this parallel between two historic moments gives his analysis a gravitas missing from many leftists, many self-styled Marxist interpretations of the globalization phenomenon.

Secondly, Milanović-- an acknowledged expert in comparative economic inequality-- makes an important observation regarding the asymmetry between Globalization I and II. While they are alike in many ways, they differ in one important, significant way: while Globalization I benefited the Great Powers at the expense of the colonial world, the workers in the former colonies were actually benefited by Globalization II. In Milanović’s words: 

Replacing domestic labor with cheap foreign labor made the owners of capital and the entrepreneurs of the Global North much richer. It also made it possible for the workers of the Global South to get higher-paying jobs and escape chronic underemployment…  It is therefore not a surprise that the Global North became deindustrialized, not solely as the result of automation and the increasing importance in services in national output overall, but also due to the fact that lots of industrial activity went to places where it could be done more cheaply. It’s no wonder that East Asia became the new workshop of the world.

While he misleadingly uses the expression “coalition of interests,” Milanović elaborates:

This particular coalition of interests was overlooked in the original thinking regarding globalization. In fact, it was believed that globalization would be bad for the large laboring masses of the Global South — that they would be exploited even more than before. Many people perhaps made this mistake based on the developments of Globalization I, which indeed led to the deindustrialization of India and the impoverishment of the populations of China and Africa. During this era, China was all but ruled by foreign merchants, and in Africa farmers lost control over land — toiled in common since time immemorial. Landlessness made them even poorer. So the first globalization indeed had a very negative effect on most of the Global South. But that was not the case in Globalization II, when wages and employment for large parts of the Global South improved.

Milanović makes an important point, though it risks exaggeration by his insistence that because Globalization II brought a higher GDP per worker, the workers are better off and exploited less. 

They may well be better off in many ways, but they are likely exploited more.

Because he forgoes a rigorous class analysis, he assumes that gain in GDP per worker goes automatically to the worker. Most of it surely does not; if it did, capital would not have shifted to the Global South. Instead, most of the GDP per capita goes to the capitalist-- foreign or domestic. Capital would not migrate to the former colonies if it garnered a lower rate of exploitation.

But engagement with manufacturing in Globalization II, rather than resource extraction or handicraft, certainly provides workers in the former colonies with greater employment, better wages, and more opportunity to parlay their labor power into a more advantageous position-- a fact that nearly all development theorists from right to left should concede.

Structural changes in capitalism-- the rapid mobility and ease of mobility of capital, the opening of new lower wage markets, a revolution in the means and costs of transportation-- have shifted manufacturing and its potential benefits for workers from its location in richer countries to a new location in poorer countries, creating a new leveling between workers in the North and South. 

Denying or neglecting this reality has led many leftists-- like John Bellamy Foster-- to support the “labor aristocracy” thesis as a reason to ignore or demean the potentially militant role of workers in the advanced capitalist countries. As one of the strongest voices in support of the revolutionary potential of the colonial workers and peasants, Lenin was scathingly critical of elements of the working class who were indirectly privileged by the wealth accumulated from the exploitation of the colonies. Those “labor aristocrats” constituted an ideological damper on the class politics of Lenin’s time (and even today), but by no means gave a reason to deny the class’s revolutionary potential. Certainly, the ruling classes of the Great Powers employed that relative privilege and many other ploys to further exploit their domestic workers to the fullest extent and discourage their rebellion.

Bellamy and others want to deny the revolutionary potential of the workers in the advanced capitalist countries in order to support the proposition that the principal contradiction today is between the US, Europe, and Japan and the countries of the Global South. Bellamy endorses the Monthly Review position taken as far back as the early 1960s: “Some Marxist theorists in the West took the position, most clearly enunciated by Sweezy, that revolution, and with it, the revolutionary proletariat and the proper focus of Marxist theory, had shifted to the third world or the Global South.” 

While frustration with the lack of working-class militancy (worldwide) is understandable and widespread, it does not change the dynamics of revolutionary change-- the decisive role of workers in replacing the existing socio-economic system. Nor does it dismiss the obligation to stand with the workers, the peasants, the unemployed, and the déclassé wherever they may be-- within either the Great Powers or the former colonies.

Just as revolutionary-pessimism fostered the romance of third-world revolution among Western left-wing intellectuals in the 1960s, today it is the foundation for another romantic notion-- multipolarity as the rebellion of the Global South. Like its Cold War version, it sees a contradiction between former colonies and the Great Powers of our time as superseding the contradiction between powerful monopoly corporations and the people. 

Of course, richer capitalist states and their ruling classes do all they can to protect or expand any advantages they may enjoy over other states-- rich or poor-- including economic advantages. But for the workers of rich or poor states, the decisive question is not a question of sovereignty, not a question of defending their national bourgeoisie, or their elites, but of ending exploitation, of combatting capital. 

The outcome of the global competition between Asian or South American countries and their richer Western counterparts over market share or the division of surplus value has no necessary connection with the well-being of workers in the sweatshops of the various rivals. This is a fact that many Western academics seem to miss.  

Thirdly, Milanović clearly sees the demise of Globalization II-- the globalization of our time:

The international wave of globalization that began over thirty years ago is at its close. Recent years have seen increased tariffs from the United States and the European Union; the creation of trade blocs; strong limits on the transfer of technology to China, Russia, Iran, and other “unfriendly” countries; the use of economic coercion, including import bans and financial sanctions; severe restrictions on immigration; and, finally, industrial policies with the implied subsidization of domestic producers.

Again, he is right, though he fails to acknowledge the economic logic behind the origins of Globalization II, the conditions leading to its demise, and the forces shaping the post-globalization era. For Milanović, globalization's end comes from policy decisions-- not policy decisions forced on political actors-- but simply policy preferences: “Trump fits that mold almost perfectly. He loves mercantilism and sees foreign economic policy as a tool to extract all kinds of concessions…” Thus, Trump’s disposition “explains” the new economic regimen; we need to look no deeper.

But Trump did not end globalization. The 2007-2009 economic crisis did. 

Globalization was propelled by neoliberal restructuring combined with the flood of cheap labor entering the global market from the “opening” of the People’s Republic of China and the collapse of Eastern Europe and the USSR. Cheaper labor power means higher profits, everything else being the same.

With the subsequent orgy of overaccumulation and capital running wildly looking for even the most outlandish investment opportunities, it was almost inevitable that the economy would crash and burn from unfettered speculation.

And when it did in 2007-2009, it took trade growth with it and marked “paid” on globalization.

As I wrote in 2008:

 As with the Great Depression, the economic crisis strikes different economies in different ways. Despite efforts to integrate the world economies, the international division of labor and the differing levels of development foreclose a unified solution to economic distress. The weak efforts at joint action, the conferences, the summits, etc. cannot succeed simply because every nation has different interests and problems, a condition that will only become more acute as the crisis mounts…

“Centrifugal forces” generated by self-preservation were operant, pulling apart existing alliances, blocs, joint institutions, and common solutions. Trade agreements, international organizations, regulatory systems, and trust greased the wheels of global trade; distrust, competition, and a determination to push economic problems on others threw sand on those wheels. 

Anticipating the period after the demise of globalization, I wrote in April of 2009:

To simplify greatly, a healthy, expanding capitalist order tends to promote intervals of global cooperation enforced by a hegemonic power and trade expansion, while a wounded, shrinking capitalist order tends towards autarky and economic nationalism. The Great Depression was a clear example of heightened nationalism and economic self-absorption. 

The aftermath of the 2007-2009 Great Recession was one such example of “a wounded, shrinking capitalist order.”  And predictably, autarky and economic nationalism followed.

The tendency was exacerbated by the European debt crisis that drove a wedge between the European Union’s wealthier North and the poorer South. Similarly, Brexit was an example of the tendency to go it alone, substituting competition for cooperation. Ruling classes replaced “win-win” with zero-sum thinking.

The pace and intensity of international trade has never recovered. 

While Milanović does not attend to it, this cycle of capitalist expansion, economic crisis, followed by economic nationalism (and often, war) recurs periodically. 

In the late-nineteenth century, the global economy saw a vast restructuring of capitalism, with new technologies and rising productivity (and concomitant rises in rates of exploitation).The era also saw what economists cite as “a world-wide price and economic recession” from 1873 to 1879 (the Long Depression). In its wake, protectionism and trade wars broke out as everyone tried to dispose of their cheaper goods in other countries, only to be met with tariff barriers. 

The imperialist “scramble for Africa” -- so powerfully described by John Hobson and V. I. Lenin-- raised the intensity of international competition and rivalry, while generating the foundation for economic growth and global trade with newly acquired colonies. This is the period that Milanović characterizes as Globalization I. A further aspect and stimulus of the rebirth of growth and trade was the massive armament programs mounted by the Great Powers. The unprecedented armament race-- the “Dreadnought race” -- served as an engine of growth, while exponentially increasing the danger of war (from 1880 to 1914 armament spending in Germany increased six-fold, in Russia three-fold, in Britain three-fold, in France double, source: The Bloody Trail of Imperialism, Eddie Glackin, 2015).

One could argue, similarly, that the 1930s were a period of depression and economic nationalism, following a broad, exuberant economic expansion. And as with the pre-World War I Globalization I, the contradictions were resolved with World War.

Is War our Destiny after the Demise of Globalization II? 

Certainly, the historical parallels cited above suggest that wars often follow pronounced economic disruptions and the consequent rise of economic nationalism, though we must remember that events do not follow a mechanical pattern.

Yet if history is a great teacher, it certainly looks like the mounting contradictions of today’s capitalism point to intensifying rivalry and conflict. A March 24 Wall Street Journal headline screams: Trade War Explodes Across World at a Pace Not Seen in Decades!  

The article notes that the infamous Smoot-Hawley (tariff) Act of 1930-- a response to the Great Depression-- was only rescinded after the war.

It also notes-- correctly-- that tariffs are not simply a Trump initiative. As of March 1, the Group of 20 have imposed 4500 import restrictions-- up 75% since 2016 and increased 10-fold since 2008.

The World Trade Organization, responsible for organizing Globalization II has failed its calling. As the WSJ reports:

In February, South Korea and Vietnam imposed stiff new penalties on imports of Chinese steel following complaints from local producers about a surge of cut-price competition. Similarly, Mexico has begun an antidumping probe into Chinese chemicals and plastic sheets, while Indonesia is readying new duties on nylon used in packaging imported from China and other countries. 

Even sanctions-hit Russia is seeking to stem an influx of Chinese cars, despite warm relations between Russian President Vladimir Putin and Chinese leader Xi Jinping. Russia in recent weeks increased a tax on disposing of imported vehicles, effectively jacking up their cost. More than half of newly sold vehicles in Russia are Chinese-made, compared with less than 10% before its 2022 invasion of Ukraine.

As tensions mount on the trade front, rearmament and political tensions are growing. War talk mounts and the means of destruction become more effective and greater in number. The US alone accounts for 43% of military exports worldwide, up from 35% in 2020. France is now the number two arms exporter, surpassing Russia. And, in over a decade, NATO has more than doubled the value of weapons imported. 

European defense spending is expanding at rates unseen since the Cold War, in some cases since World War II. According to the BBC, “On 4 March European Commission President Ursula Von der Leyen announced plans for an €800bn defence fund called The ReArm Europe Fund.”  Germany has eliminated all restraints on military spending in its budget. Likewise, the UK plans to increase military spending to 2.5% of GDP in the next two years, while Denmark is aiming for 3% of GDP in the same period (growth rates consistent with those of the Great Powers before World War I, except for Germany).

Dangerously, centrist politicians in the EU are beginning to see rising military spending as a boost to a stuttering economy. As military Keynesianism takes hold, the possibility of global war increases, especially in light of the shifting alliances in the proxy war in Ukraine.

Even more ominously, Europe’s two nuclear powers-- France and the UK-- are seriously discussing the development of a European nuclear force independent of the US-controlled NATO nuclear capability.

At the same time, the incoming chair of the US Joint Chiefs of Staff announced readiness to supply more NATO powers with a nuclear capacity.

As war cries intensify, the EU Commission has issued a guidance that EU citizens should maintain 72 hours of emergency supplies to meet looming war dangers.

Of course, the continually escalating wave of tariffs, sanctions, and hostile words directed at The People's Republic of China by the US and its allies threatens to break into open conflict and wider war, a war for which the PRC is quite understandably actively preparing. 

As with previous World Wars, it is not so much-- at this moment-- who is right or wrong, but when the momentum toward war will become irreversible. Another imperialist war-- for, in essence, that is what it would be-- will be an unimaginable disaster. No issue is more vital to our survival than stopping this momentum toward global war.

Greg Godels

zzsblogml@gmail.com

The Tragedy of Syria

It is cruelly fitting that one of the acknowledged cradles of civilization is now a showroom for the cruelties, irrationalities, and injustices of the modern capitalist world. 

At various times, Syria was part of the lands that were widely admired for their enlightened governance, tolerance, and economic development. 

Today, Syria is a wasteland, divided into parcels, and occupied by alien forces that show no regard for the country's legacy or the unity and well-being of its people. 

After four hundred years of reasonably stable, tolerant, and peaceable existence under Ottoman rule, the people of the country now known as Syria experienced the heavy hand of European imperialism. With the Sykes-Picot agreement, Syria became the “responsibility” of France after World War I, existing essentially as a French colony with its artificial boundaries established by European powers.

Understandably, the colonial subjects resisted. As it always does, the anti-colonial struggle provided the impetus for consolidating a nation in a space where a country never existed. As with the seminal anti-colonial victory in what is now the US, the fight against the French was an essential condition to the forging of the Syrian nation-state. Nation-building emerges from and advances from the struggle against domination, for independence.

But it was not a sufficient condition. After World War II, when France proved unable to maintain its colonies, the new Syria had to fulfill other difficult conditions of nation-building. Decolonization left the scars of oppression-- social, political, and economic backwardness.

Without independent political organizations and well-established institutions, the military-- made up of anti-colonial fighters, tribal militias, even former French collaborators-- served as a unifying force. Politics was conducted through the often-violent clash of military factions. Countering this chaos was the impact of Arab nationalist and Arab socialist secular trends emerging throughout the Middle East. Ba’athism and Nasserism were two progressive influences tempering Islamic fundamentalism, tribalism, and the complacency of feudal and primitive capitalist economies.

Concurrent with aid from the Soviet Union and the guarantee of Syrian sovereignty against imperialist aggression, the alliance of the military, the Ba’ath Party, and the Communist Party consolidated and took a leftward turn, strengthening their hand against the backward elements. This progressive development in the energy-rich Middle East did not go unnoticed by the United States and its then-designated local police agents: Israel and Iran. 

In the ensuing years, Syria continued to struggle for national unity, agrarian reform, and modernization under the 30-year presidency of Hafez Al-Assad. Assad brought a measure of stability and peace, while imperialism encouraged and materially supported the Muslim Brotherhood and other fundamentalists to undermine these secular developments. 

Typically, European and US ideologues railed against the fragile state, condemning its failure to embrace modern capitalist institutions while these same ideologues were encouraging feudal jihadists to rebel against secularism. 

With the dissolution of the Soviet Union and the death of the elder Assad, the tenuous progress of Syria, its independence, and its unity were weakened. Under the leadership of the younger, less visionary Bashir al-Assad, without any powerful allies, and with active and determined plotters in Washington, the future of Syria was in doubt. Assad’s flirtation with market economics and privatization brought his regime no respite from imperialist machinations.

In 2011, protests against Assad’s rule were co-opted by foreign security services. Through the auspices of the CIA, through its vast network of ready and willing jihadists, and armed with weapons shipped from the overthrown government of Libya, a brutal proxy war was launched. Neo-Ottoman Turkey threw its own jihadists into the fight. And the US armed and unleashed Kurdish nationalists to further pressure the Assad government and serve US interests.

What the mainstream media called “a Revolution and the Syrian Civil War” was, in fact, a conflict of proxies and of foreign intervention. In response to Turkish and US meddling and to the arrival of hordes of foreign jihadists, Hezbollah militias and Iranian and Russian forces came to the assistance of the weak Assad government forestalling the chaos that follows forcible regime change.  

As the war reached somewhat of a stalemate, Assad stood in Damascus, ruling the little that was left of the country’s infrastructure, housing, economy, and territorial integrity. US Marines occupied a portion of Syria with its oil resources. Kurds ruled in another part of the country under US protection. The US’s NATO ally, Turkey-- hostile to the Kurds-- ruled in another part of Syria, supporting their favored brand of head-chopping jihadists. Israel took advantage of weakened foes and occupied a large slice of Syria nearer to Damascus, while destroying all Syrian military assets in Southern Syria. 

If this reverse of nation-building, this nation-degrading process seems familiar, it should. It resembles all too well the willful, post-Cold War, systematic destruction of fragile states constructed around multiple ethnicities and enjoying a measure of national independence. Without the international leverage of a socialist bloc, led by the powerful Soviet Union, the imperialist bloc disposed of contrarian states like Yugoslavia, Iraq, and Libya, usually by fomenting ethnic strife or supporting elite demands. Failing states throughout Africa and Asia bear similar scars, inflicted by great powers bent on strengthening their spheres of interest, as France attempts in sub-Saharan Africa. 

In late 2024, Turkey unleashed its own stable of radical, fundamentalist head-choppers, Hayat Tahrir al-Sham, against the Assad regime from its lair in Idlib province. The demoralized, spent forces of Assad’s military were swiftly overwhelmed. Despite designation as a “terrorist group” by the UN (and the US), HTS was heralded by most of the US and European mainstream media as victorious freedom fighters. Reporters flocked to Damascus-- after staying far away for years, while reporting from Beirut and the US embassy-- to “prove” the evil of the Assad regime. Easily duped by local opportunists, much of the reportage collapsed as facts and evidence came forward.

Ahmed al-Sharaa, the head of HTS anointed himself the new Syrian head of state, adopted a proper Western suit, shaved his beard, and pronounced a new era of peace and harmony, while outlawing political parties, postponing a new constitution, and cancelling elections until far off in the future. Such is the new Syrian Democracy.

But public relations cannot restrain the blood lust of the fundamentalist head-choppers. In 2025, HTS elements began a vengeance campaign against Baa’ath cadre, former military leaders, and religious “infidels,” killing and attacking civilians in Alawite and Christian villages. 

Understandably, a new resistance is emerging. Bizarrely, EU authorities blame the massacres on those resisting HTS.

No doubt at the urging of its foreign sponsors (especially the US), HTS and the Kurds were herded into a cooperative agreement in March that includes the merging of its “military institutions” -- a move that hopes to strengthen their hand against future Syrian resistance and present an image of unity to the rest of the world. The Kurds give the US greater influence at the expense of the Turks.

The last pages of the Syrian tragedy are yet to be written.

There are lessons to be learned.

The post-Soviet era has emboldened a ruthless, cruel imperialism. Without the threat of Soviet power to present a counterforce, the US, NATO, and other powers are free to impose their will on other states, including taking their own rivalries to the brink of World War. Few remember that the then-real threat of Soviet intervention, stopped the Israelis from passing beyond the Golan Heights and marching to Damascus during the Six Day War-- a principled act of international solidarity.

As a corollary, it is impossible to fail to note that there are no similar counterbalancing forces today. There have been no political, economic, or military powers demonstrably committed to a principled defense of weaker states threatened by imperialist aggression since the Cuban and Soviet defense of Angola and the defeat of South African apartheid aggression in the 1980s.

That reality is not only a tribute to the socialist internationalism of the past, but a sobering message to those on the left who interpret the realignment of great powers-- the so-called tendency to multipolarity-- as a new kind of anti-imperialism. The experience of Syria-- left on its own to defend its integrity and sovereignty against the agents of backwardness and great-power interests-- speaks to the impotence of the so-called BRICS block. Issuing protests, resolutions, and condemnations is no substitute for action or material aid. Russian support, once so vital to Assad’s defense, failed to rise against HTS and is now offered shamelessly to its former foe. 

Capitalist alliances around spheres of influence or temporary common interests are far removed from principled anti-imperialism, a stance only possible apart from the logic of capitalist competition. Anti-imperialism is a principle, not a self-interested calculation.

Greg Godels

zzsblogml@gmail.com

Why Class Matters

After the last election, Democratic Party functionaries were puzzled that voters-- usually attuned closely to the economy-- failed to show proper appreciation for the Biden economic miracle. They cited the billions in federal money flowing toward economic growth; they repeated aggregate growth figures more robust than other advanced economies; they showed that consumer spending continued to show surprising vigor; they noted that aggregate incomes grew faster than inflation; and they reminded us of the often-mentioned markers of rising stock market and housing values.

Baffled by the voters who shunned Bidenomics and complained about the economy, Democratic Party pundits are convinced that voters are simply ignorant of the facts.

Today, perhaps more than ever, the failure to recognize social-class divisions produces ill-informed, arrogant judgments like those prominent within Democratic Party circles. While aggregate numbers may tell one story, they fail to tell the story of the economic well-being of the classes and strata that make up the aggregate, even the by-far-largest segment of that aggregate. Could it be that Biden’s economic victory was a victory for the wealthiest, the most generously compensated among the US population, while leaving the majority of US citizens (and voters) in the rear-view mirror?

The answer is an unequivocal ‘yes.’

And the answer comes, not from a left-leaning think tank, but from Federal Reserve data by way of Moody’s Analytics and summarized in The Wall Street Journal.

As reported in the WSJ, the top 10% of “earners” -- those households reporting $250,000 in income or more-- are responsible for 49.7% of consumer spending. In other words, nearly half of all consumer spending is accounted for by those in the top 10% of all those reporting their incomes. This is the largest share for this elite segment since the Federal Reserve began tracking in 1989. In just three decades, the top 10%'s portion has increased from over a third to nearly half of all consumer spending.

According to the WSJ:

Taken together, well-off people have increased their spending far beyond inflation, while everyone else hasn’t. The bottom 80% of earners spent 25% more than they did four years earlier, barely outpacing price increases of 21% over that period. The top 10% spent 58% more…

Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period.

Democratic Party consultant James Carville likes to say “it's the economy, stupid!” that decides US elections. If he is right, the celebration of Bidenomics was widely off the mark. During the Biden years, for 80% of US voters, their economy was stagnant, at best. In that light, the election results are far more understandable as reflective of pocketbook issues.

US economic growth is often portrayed by the major media as driven by household consumption (around two-thirds of gross US economic activity comes from household consumption). However, these reports are deceptive if they fail to acknowledge that nearly all of the consumption growth impacting GDP growth comes from the wealthiest 10% of the population. Arguably, so-called luxury spending is the driving force behind economic growth in the US in our time.

Thus, the widely heralded mantra of capitalist apologists that “a rising tide lifts all boats” has it backwards. In fact, the privileged 10% of all boats that rise constitute the tide.

Economy 101 preaches that working people spend nearly all that they make (or need to borrow more to make ends meet). That same conventional wisdom tells us that the rich reinvest or save most of their earnings. Both may be and are true, though inequality of income has grown so much that the richest 10% can save and reinvest while spending lavishly and conspicuously.

Since late 2021, the excess savings of the bottom 90% has dropped from about $1.1 trillion dollars to $300 billion at the end of 2024. In roughly the same period, the uppermost 10% has maintained an excess savings of about $1.3-1.4 trillion, according to Moody’s Analytics. Clearly, the bottom 90% was forced to draw down savings over the last four years in order to get by. It is important to notice that the concept of the “bottom 90%” masks the reality that each successive lower decile of household income below the top 10% has fewer means and lesser savings to meet a reasonably adequate standard of living. In short, the pain induced by a system maintaining such vast income inequality grows more acute as the level of income declines.

While not a proper class analysis of US society (not to be expected from official government statistics), the Federal Reserve data, as interpreted by Moody’s Analytics, provides a material basis for understanding the most recent US election.[i] As opposed to dire conclusions of a fascist mentality sweeping the country or wild celebrations of the revival of a mythical conservative past, the economic unraveling of the last period fed the electorate's profound thirst for change, any change.

In the wake of a deep economic collapse in the first decade of a new century-- a crisis unlike any seen for generations-- US voters turned, at that time, to a fresh-faced Democrat promising change. He won voters with his earnest, unbounded hope. He produced little change, but more of the same blindness to inequality.

Now, in the wake of the economic stagnation and hardship for the majority 90% struggling through the Biden years, another snake oil salesman returns, capturing one of the two decadent parties with another message of change-- Make America Great Again.

And again, voters act out of desperation.

Don’t blame the voters, blame the bankrupt two-party system and the economic system dominated by and for the rich and powerful.

Greg Godels
zzsblogml@gmail.com

[1] A proper economic class analysis will not evoke income or wealth-- simply contingent, quantified signifiers of inequality-- but qualitative indicators of socio-economic position or status. For Marxists, class is defined by an agent's function within a particular mode of production with regard to the economic relation of exploitation. Thus, under capitalism, class is a division between exploiters-- capitalists-- and the exploited-- workers. One class commands the means of production, the other class sells the former its labor power.

Of course, there are strata within and outside of the two classes: the haute and petit bourgeoisie, the ‘labor aristocracy,’ industrial workers, lumpen-proletariat, etc.

In general, income and wealth inequality are a result of class division and exploitation under capitalism and not its cause.

A Return to Basics: Rasmus, the “Neoliberal” Turn, and Exploitation

Instead of the conservative motto, 'A fair day's wage for a fair day's work!' they ought to inscribe on their banner the revolutionary watchword: 'Abolition of the wage system!' Karl Marx, Value, Price, and Profit

Today, the point that Marx made in his 1865 address to the First International Working Men’s Association is largely lost on the trade unions and even with many self-styled Marxists. The distinction between the goal of “a fair day's wage” and the goal of eliminating exploitation-- the wage system embedded in capitalism-- is lost before a common, but unfocused revulsion to the exploding growth of inequality. It is one thing to deplore the growth of inequality, it is quite another to establish what would replace the logic of unfettered accumulation.

Marx offered no guidelines for a “fair wage”. Indeed, his analysis of capitalism made no significant use of the concept of fairness. Instead, he made the concept of exploitation central to his political economy. He used the concept in two ways: First, he employed “exploitation” in the popular sense of “taking advantage of” -- the sense that the capitalist takes advantage of the worker. “Exploitation of man by man” was a nascent concept, arriving in discourse with the expansion of mass industrial employment and borrowed from an earlier, morally-neutral usage regarding the exploitation of non-humans. Its etymology, in that sense, arises in the late eighteenth century.

Marx also uses the word in a more rigorous sense: as a description of the interaction of the worker and the capitalist in the process of commodity production. Even more rigorously, it appears in political economic tracts like Capital as a ratio between the axiomatic concepts of surplus value and variable capital.

As a worker-friendly concept, exploitation is most readily grasped by workers in the basic industries, especially in extractive and raw-material industries. Historically, an early twentieth century coal miner-- bringing the tools of extraction with him, responsible for his own safety while risking a more likely death than a war-time soldier, and accepting the “privilege” of going into a cold, damp hole to dig coal for someone else’s profit-- intuitively understood exploitation. A reflective miner would recoil from the fact that ownership of a property could somehow-- apart from any other consideration-- confer to someone the right to profit from a commodity that someone else had faced mortal danger to extract from the earth. What is a “fair day’s wage” in such a circumstance?

Organically, from its intuitive understanding by workers, and theoretically, from class-partisan intellectuals like Marx and Engels, as well as their rivals like Bakunin, exploitation became the central idea behind anti-capitalism and socialism.

Today, most workers’ connection to the exploitation relation appears far removed from the direct relation of a coal miner to the coal face and to the owner of the coal mine. The immediacy of labor and labor’s product in extraction is often of many removes in service-sector or white-collar jobs. Moreover, the division of labor blurs the contribution of the individual’s efforts to the final product.

Well into the twentieth century, “labor exploitation” fell out of the lexicon of the left, especially in the more advanced capitalist countries, where Marx thought that it would be of most use. Left thinkers, as well as Marxists, rightly attended to the colonial question, focusing on the struggle for independence and sovereignty; they were discouraged by the tendency for class-collaboration in many leading working-class organizations; Communist Parties correctly felt a primary duty to defend the gains of the socialist and socialist-oriented countries; and the fight for peace was always a paramount concern.

Exploitation was attacked from the academy. The Humanist “Marxist” school trivialized the exploitation nexus to a species of the broad, amorphous concept of alienation. The Analytical “Marxist” school congratulated itself by proving that given an inequality of assets, a community of exchange-oriented actors would produce and reproduce inequality of assets, a proof altogether irrelevant to the concept of exploitation, which the school promised to clarify. Both schools influenced a retreat from Marxism in the university, followed by a stampede after the collapse of the Soviet Union.

Liberal and social-democratic theory revisits the “fair day's wage” with the explosion of income inequality and wealth inequality of the last decades of the twentieth century that was too impossible to ignore. But what is a “fair wage”? What level of income or wealth distribution is just, fair, socially responsible, or socially beneficial? The questions are largely unanswerable, if not incoherent. 

Thanks to the empirical, long-term study of inequality shared in Thomas Piketty’s Capital in the Twenty-first Century, we learn that capitalism’s historical tendency has been to always produce and reproduce income and wealth inequality, a conclusion sobering to those who hope to refashion capitalism into an egalitarian system and making a “fair wage” even more elusive. Piketty’s work offers no clue to what could constitute a “fair wage.”

Others point to the productivity-pay gap that emerged in the 1970s, where wage growth and productivity took entirely different courses at the expense of wage gains. Researchers who perceptively point to this gap as contributing to the growth of inequality often harken back to the immediate postwar era, when productivity growth and wage growth were somewhat in step, when the gains of productivity were “shared” between capital and labor. But what is magical about sharing? Why shouldn't labor get 75% or 85% of the gain? Or all of the gain? Is maintaining existing inequalities the optimal social goal for the working class?

Where the concept of a “fair wage” offers more questions than answers, Marx’s concept of exploitation suggests a uniquely coherent and direct answer to the persistent and intensifying growth of income and wealth: eliminate labor exploitation! Abolish the wage system!

Thus, the return to the discussion of exploitation is urgent. And that is why a serious and clarifying account of exploitation today is so welcome.

*****

Jack Rasmus takes a step toward that end in a carefully argued, important paper, Labor Exploitation in the Era of the Neoliberal Policy Regime. I have followed Rasmus’s work for many years, especially admiring his respect for the tool of historical inquiry and his scrupulous research, interpretation, and careful use of “official” data. On the other hand, I thought that his work failed to fully consider the Marxist tradition, unduly drawn to engaging with the pettifoggery of academic “Marxists.”

However, his new work proves that assessment to be mistaken. Indeed, his latest work reflects an admirable reading of Marx’s political economy and offers an important tool in the struggle to end the wage system.

Rasmus understands that we are in a distinct era of capitalism, forced by the failure of the prior “policy regime” and typified by several features: intensified global penetration of capital and trade expansion (“globalization”), a massively growing role for financial innovation and notional profits (“financialization”), and most significantly, the restoration and expansion of the rate of profit (“the intensification of labor exploitation in both Absolute and Relative value terms that has occurred from the 1980s to the present”). 

It should be noted that Rasmus does not discuss why a new “policy regime” became necessary in the 1970s. Both the stagflation that proved intractable to the reigning Keynesian paradigm and the attack on the US profit rate by foreign competition (see Robert Brenner, The Economics of Global Turbulence, NLR, 229) necessitated a sea change in the direction of capitalism.

I might add that while so-called globalization was an important feature of “the neoliberal policy regime,” the 2007-2009 economic crisis has diminished the growth of global trade. Indeed, its decline has fostered the rise of economic nationalism, the latest wrinkle on the “neoliberal policy regime.”

Rasmus carefully and methodically documents and explicates the intensification of labor exploitation in commodity production (what he calls “primary exploitation”) over the last fifty years. He recognizes the important and growing role of the state in enabling this intensification. This is, of course, the process that Lenin foresaw with the fusing of the state and monopoly capitalism-- a process associated in Marxist-Leninist theory with the rise of state-monopoly capitalism. Today’s advanced capitalist states fully embrace the goal of defending and advancing the profitability (‘health’) of monopoly corporations (‘a rising tide lifts all boats’), including intensifying labor exploitation.

Just how that intensification is accomplished is the subject of Rasmus’s paper.

*****

Rasmus is aware that Marx expressed the exploitation nexus in terms of labor value. He avoids the scholasticism that side-tracks academically trained economists who obsess over the price/value relationship-- the so-called transformation problem. Value-- specifically a labor theory of value -- is central to Marx because it explains how commodities can command different, non-arbitrary exchange values and how the different proportionalities between the exchange values of commodities are determined. That is the problem Marx sets forth in the first pages of Capital, and value-- as embodied labor-- is the answer that he gives.

Using labor value as his theoretical primitive enables Rasmus to discuss exploitation in Marx’s framework of absolute and relative surplus value-- exploitation by extending the working day or intensifying the production process. While Rasmus offers a persuasive argument that his use of “official” data couched in prices can legitimately be translated into values, it is unnecessary for his thesis. The relations are preserved because the proportionalities are, in general, preserved. It is a reasonable and adequate assumption that prices and values run in parallel, though a weaker claim than that prices can be derived from values.

Methodological considerations aside, Rasmus sets out to show-- and succeeds in showing-- that exploitation has accelerated in the “neoliberal” era in terms of both relative and absolute surplus value:

Capitalism’s Neoliberal era has witnessed a significant intensification and expansion of total exploitation compared to the pre-Neoliberal era. Under Neoliberal Capitalism both the workday (Absolute Surplus Value extraction) has been extended while, at the same time, the productivity of labor has greatly increased (Relative Surplus Value extraction) in terms of both the intensity and the mass of relative surplus value extracted.

Regarding Absolute Surplus Value, he demonstrates: 

[I]t is true the work day was reduced during the first two thirds of the 20th century—by strong unions, union contract terms, and to some extent from government disincentives to extend the work day as a result of the passage of wages and hours legislation. But that trend and scenario toward a shorter work day was halted and rolled back starting in the late 1970s and the neoliberal era. The length of the Work Day has risen—not continued to decline—for full time workers under the Neoliberal Economic Regime.

Through a careful combing and analysis of government data, as well as original arguments, Rasmus shows how capital has succeeded in extending the workday. His discussion of changes in mandatory overtime, in temporary employment, in involuntary part-time employment, in paid leave, in changing work culture, in job classifications, in work from home, internships, and other practices form a persuasive argument for the existence of a trend of the lengthening of the average workday. 

Similarly, Relative Labor Exploitation has accelerated in the “Neoliberal” era, according to Rasmus:

Rising productivity is a key marker for growing exploitation of Labor. If real wages have not risen since the late 1970s but productivity has—and has risen at an even faster rate in recent decades—then the value reflected in business revenues and profits of the increased output from that productivity has accrued almost totally to Capital.

In this regard, the numbers are widely recognized and non-controversial. Labor productivity has grown significantly, while wages have essentially stagnated. Rasmus tells us that it is even worse than it looks:

So, wages have risen only about one-sixth of the productivity increase.  But perhaps only half of that total 13% real hourly wage increase went to the top 5% of the production & nonsupervisory worker group, according to EPI 10 (Economic Policy Institute, February 2020). That means for the median wage production worker, the share of productivity gain was likely 10% or less. The median wage and below production worker consequently received a very small share in wages from productivity over the forty years since 1979. It virtually all accrued to Capital…

According to the US Labor Department, there were 106 million production & nonsupervisory workers at year end 2019—out of the approximately 150 million total nonfarm labor force at that time. Had they entered the labor force around 1982-84, they would have experienced no real wage increase over the four decades.

Rasmus notes that the US maintained the same share of global manufacturing production through the first two decades of the twenty-first century, but doing it with six million fewer workers. This, of course, meant a rising rate of exploitation and a greater share of surplus value for the capitalists. Though the job losses struck especially hard at an important section of the manufacturing working class relegated to unemployment, the remaining workers lost further from concessionary bargaining promoted by a business-union leadership. Thus, they were unable to secure any of the gains accrued by rising productivity. They experienced a higher rate of exploitation.

*****

Demonstrating that labor exploitation has increased in the last 45-50 years in terms of absolute and relative surplus value does not, according to Rasmus, close the book on labor exploitation. Drawing on a suggestive quote in Volume III of Capital, he develops an original theory of “secondary exploitation.” Marx writes:

That the working-class is also swindled in this form [usury, commerce], and to an enormous extent, is self-evident… This is secondary exploitation, which runs parallel to the primary exploitation taking place in the production process itself. Capital, Volume III, p. 609 

Rasmus explains secondary exploitation this way: “Secondary Exploitation (SE) is not a question of value being created in exchange relations. It’s about capitalists reclaiming part of what they paid initially in wages. It’s about how capitalists maximize Total Exploitation by manipulating exchange relations as well as production relations.” 

To be clear, Marx is not using the technical sense of “exploitation” here, but the popular sense. However, the fact that the worker has “earned” a measure of value and that capitalists can wrest some of it away in various ways is exploitation and important and worthy of study. 

Here, however, Rasmus digresses, reverting back to the price form in his explanation of secondary exploitation. He seems to assume, without elaboration, that systemic “taking advantage of workers” outside of the production process must be explained in terms of prices and not values. He also seems to believe that all means of secondary exploitation must be within the exchange nexus. And he seems to believe that all secondary exploitation must be systemic. It is not clear why these assumptions should be made.

These methodological questions, however, bear little relevance to his fresh and original insights on secondary exploitation. Rasmus presents five mechanisms for capital to “claw back” from the working people the variable capital captured by the class in the value-producing process: credit, monopolistic price gouging, wage theft, deferred or social wages, and taxes. Importantly, Rasmus connects much of this exploitation to the active intervention of the state on behalf of capital.

Credit: Allowing workers to acquire commodities through deferred payment is not a sympathetic act by the capitalist, but a method of furthering accumulation in an environment where demand is restricted by the inequalities of income and wealth. The capitalist extracts additional value from the worker through interest charges. Additional value is “swindled” from the worker through the credit mechanism. Rasmus points out that interest-bearing loans to working people have expanded from $10 trillion-plus in 2013 to $17 trillion-plus in 2024, with dramatically higher interest rates in the last few years.

Monopolistic price gouging: Rasmus is fully aware that when prices go up, they are the result of decisions by capitalists to secure more revenue-- that action is not to benefit society, not to help the workers, but to secure more for investors. Insofar as they succeed, their gains are at the expense of workers-- a form of secondary exploitation.

Our current run of inflation is the result of a cycle of price increases to capture more of the consumers’ (in the end, the workers’) value and to catch up with competitors. But the impression must not be left unchallenged that this price gouging is painlessly left to the capitalist at his or her whim or that it is without risk. The impression must not be left, as it was in the 1960s with Sweezy/Baran, Gillman, and others, that monopoly concentration meant a sharp decline in the power of competition to retard and even thwart monopoly power to do as it liked. That lesson was sharply brought home in the 1970s with humbling of the US big three automakers and the US electronics industry. Monopoly and competition play a dialectical role in disciplining price behavior around labor values.

Wage theft: While theft is not exploitation, when it is common, frequent, and rarely sanctioned, it resembles exploitation more than theft! Rasmus provides an impressible list of common ruses-- “The methods [of wage theft] have included capitalists not paying the required minimum wage; not paying overtime wage rates as provided in Federal and state laws; not paying workers for the actual hours they work; paying them by the day or job instead of by the hour; forcing workers to pay their managers for a job; supervisors stealing workers’ cash tips; making illegal deductions from workers’ paychecks; deducting their pay for breaks they didn’t take or for damages to company goods; supervisors arranging pay ‘kickbacks’ for themselves from workers’ pay; firing workers and not paying them for their last day worked; failing to give proper 60-day notice of a plant closing and then not paying workers as required by law; denying workers access to guaranteed benefits like workers’ compensation when injured; refusing to make contributions to pension and health plans on behalf of workers and then pocketing the savings; and, not least, general payroll fraud.”

Deferred or Social wages: Rasmus shows how the government mechanisms that are meant to socially meet needs are skewed to draw more from workers proportionally while benefiting them less proportionally. He has in mind retirement, health care, and welfare programs that politicians persistently demand more sacrifices from working people to fund, while restricting their ability to draw the benefits through various tests of eligibility.

Taxes: Rasmus reminds us that the dominant political forces espousing the “Neoliberal policy regime” have dramatically increased the tax burden on workers:

Since the advent of Neoliberalism, the total tax burden has shifted from capitalists, their corporations, businesses, and investors to working class families.

In the post-World War II era the payroll tax has more than doubled as a share of total federal tax revenues, to around 45% by 2020. During the same period, the share of taxes paid by corporations has fallen from more than 20% to less than 10%. The federal individual income tax as a percent of total federal government revenues has remained around 40-45%. However, within that 40-45%, another shift in the burden has been occurring—from capital incomes to earned wage incomes…

Not just Trump, but every president since 2001 the US capitalist State has been engaged in a massive tax cutting program mostly benefiting capital incomes. The total tax cuts have amounted to at least $17 trillion since 2001: Starting with George W. Bush’s 2001-03 tax cuts which cut taxes $3.8 trillion (80% of which accrued to Capital incomes), through Obama’s 2009 tax cuts and his extension of Bush’s cuts in 2008 for another two years and again for another 10 years in 2013 (all of which cost another $6 trillion), through Trump’s massive 2017 tax cuts that cost $4.5 trillion, and Biden’s 2021-22 tax legislation that added another $2 trillion at minimum—the US Capitalist state has reduced taxes by at least $17 trillion!

Reducing capital’s taxes, as a proportion of tax revenue, increases future national obligations-- national debt-- that will ultimately be paid by working-class taxes. Or, if that proves unfeasible, it will be met by a reduction of social spending, which reduces social benefits for workers. Either way, the working class faces secondary exploitation through ruling-class tax policy.

Interestingly, Rasmus acknowledges that the state plays a big role in what he deems “secondary exploitation.” Yet, he also suggests that the proper province of secondary exploitation is in the bounds of exchange relations. This seeming anomaly can be avoided if we understand the increasing role of the state in engaging, broadly speaking, in the arena of exchange, as well as regulation. It is precisely this profound and broad engagement that many twentieth-century Marxists explained as state-monopoly capitalism.

*****

Jack Rasmus’s contribution is most welcome because it argues that returning to the fundamentals-- the concept of exploitation-- can be a fruitful way of looking at contemporary capitalism. It establishes a firm material base for an anti-capitalist politics that addresses the interests of working people as a class, the broadest of classes. 

Further, the theory of exploitation unites people as workers, but allows for the various ways and degrees of their exploitation. And it links the material interests of the protagonists in the class struggle to the many forms of social oppression and their contradictory interests in promoting or ending those oppressions: the capitalist sows oppressive divisions to gain exploitative advantage; the worker disavows oppressive divisions to achieve the unity necessary to defeat exploitation. That is, exploitation motivates the capitalist to divide people around nationality, race, sex, culture, social practices, and language. Ending exploitation motivates the worker to refuse these divisions.

In an age where capitalism owns a decided, powerful advantage because of the splintering of the left into numerous causes and where capitalism elevates individual identity to a place superseding class, the common goal of eliminating exploitation is a powerful unifying force.

Today’s left has too often interpreted anti-imperialism as simply the struggle for national sovereignty, rather than through the lens of exploitation. Consequently, the dynamics of class struggle within national borders is often missed. 

Of course, for Lenin and his followers, an advanced stage of capitalism-- monopoly capitalism-- was the life form of imperialism. And its beating heart was exploitation.

The vital tool that Marx, Engels, and Lenin brought to the struggle for workers’ emancipation was the theory of exploitation. 

Greg Godels

zzsblogml@gmail.com